New Estate Developer Is Liquidating. I Had Deposited 10% to Book a Plot of Land a Year Ago. What Are My Options?

Lgreentoad on 19/06/2018 - 10:37

We booked a plot of land in Melbourne south east about a year ago by paying a 10% deposit. At the time the estate developer indicated the land titling would be happening Jun 2018. Obviously nothing has been done in the estate so far. In Jan this year I was told by my conveyancer (communicated by developer's conveyancer) that titling would be done end of 2018.

Yesterday we got a letter from a liquidator company that the developer has gone into liquidation. And they are trying to investigate the company's financials and assets to try and recover creditors money. The liquidator indicated there should be an outcome within 3 months. I know there are about 30 other parties that have booked plots in same estate amounting to more than $1 million deposits.

What happens now? Do I consider the 10% deposit as good as lost?
As I understand that the buyer's deposits are supposed to be held in a trust account. Has the developer run away with our money?

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Comments

  • dcep on 19/06/2018 - 10:40
    +5

    does your conveyancer charge you for asking these questions ?

    • greentoad on 19/06/2018 - 11:03
      +1

      I asked my conveyancer. They have said the developer has advised that they have been incorrectly put into administration. And it is being rectified.

      I don't know who or what believe now. I am worried that I may lose my money.

      • HighAndDry on 19/06/2018 - 11:07
        +9

        No see, a conveyancer's job is more than just being a messenger for the developer. They're supposed to have at least enough legal knowledge to answer these, comparatively basic, legal questions.

        • theHMASfriendship on 19/06/2018 - 11:19
          +19

          I imagine the conveyancer would have almost certainly advised greentoad to make a post on Australia's Foremost Bargains Website to resolve the issue.

        • HighAndDry on 19/06/2018 - 11:20

          @iforgotmysocks: If OP posts their conveyancer's details I'd be happy to send them an invoice.

        • greentoad on 19/06/2018 - 11:21

          @iforgotmysocks: Yes you are right. /s

      • [Deactivated] on 20/06/2018 - 09:35
        +1

        All developers argue that they should not have been put into administration. None of them welcome it.

    • reactor-au on 20/06/2018 - 16:28

      The conveyancer is going into liquidation soon as well. Bikies is the only way.

  • djkelly69 on 19/06/2018 - 11:03
    +3

    What are my options?

    Ask a paid professional what will happen, or ask the internet?

    If the money is in a trust account, there should be no issue. Liquidator will likely consider if they can go ahead with the development, and if not, the contracts will be rescinded and deposits refunded. No compensation for lost time, conveyancer's fees, etc.

    • greentoad on 19/06/2018 - 11:05

      Ok, probably asking about my options is not the right thing to ask. I have been in touch with my conveyancer.

      • QW3RTY on 19/06/2018 - 11:58

        Excellent, it seems our work here is done!

  • HighAndDry on 19/06/2018 - 11:14
    +2

    Depends on a lot of things, e.g.:

    /1. If the developer owes only a little bit of money, the liquidators could come to an agreement with the creditors and let the developer continue the development. Nothing you need to do.

    2A. If the developer owes a lot of money and is actually liquidated and the development terminated, and your deposit is in a trust account, the money is safe, you'll get it back, but nothing else.

    2B. If the developer owes a lot of money and is actually liquidated and the development terminated, and your deposit is not in a trust account - go talk to a lawyer because we can't help you and it sounds like your conveyancer can't help you either.

    • greentoad on 19/06/2018 - 11:20

      Apparently developer owe money to a bank which they haven't paid back. So the bank goes after the developer and court put the company into administration. I don't know if there has been some confusion with all this.

      I hope the developer resolves the matter with the bank and continue developing the estate.

      • HighAndDry on 19/06/2018 - 11:24

        Banks tend not to make these kinds of mistakes. It's possible, but between the two possibilities of:

        1. The bank being mistaken and spending money to sue when they've actually been getting repaid on time, and

        2. The developer being dodgy and not having money to repay their bank…

        I know which one is more likely. This also bodes badly because banks don't take these kinds of actions lightly. Ask your conveyancer where your deposit is.

      • Sofie519 on 19/06/2018 - 15:01
        +1

        The Court tends not to make these kind of mistakes!! …

        If the developer didnt pay the bank whatever money was owed, and the bank tried to recover it in court, the developer ignores the court order to pay, then it's pretty clear why it's in liquidation. It's not like the developer woke up one day, and got mistakenly liquidated, he/she knew it was coming and had time to correct it if they have the ability to do so.

        I would take everything the developer says with a grain of salt. Just ensure that all correspondences is in writing.

        p.s. I would do a company search, run a credit report on the company, to see what the amount in default is. Also run credit report on the listed/former directors ..

  • tsunamisurfer on 19/06/2018 - 11:21

    If the company does go into liquidation, then secured creditors (typically the banks) get to receover their money first, which may mean selling the real estate assets you had a booking on. If there is anything left, then the rest of the creditors can have whats left, likely cents in the dollar.

    • HighAndDry on 19/06/2018 - 11:26
      +3

      Only relevant if OP's deposit isn't in a trust account. It should be in a trust account.

  • TheBilly on 19/06/2018 - 15:21

    Read your contract of sale. Some contracts have rescind clauses for situations such as death, liquidation etc. which allow you to recover your money due to other parties fault, get clued up on what you signed up too. Contracts are not hard to read, people are just lazy.

  • Sofie519 on 19/06/2018 - 15:40

    Everyone seems to be overly secure about the trust account. It actually depends on the contract clause in relation to deposits, and most importantly if there is a clause for its refund. The developer could have the contract written to his benefit (surprised?) to allow him to access the deposit for the construction. Otherwise, if there is no clause to explicitly refund the deposit, it might also be held in limbo as another developer buys into the construction (this is not uncommon esp if the construction is towards final stages). Also if the developer is the trustee on the trust account, nothing to stop them from illegally accessing the money with full intention of committing fraud. Jail time? catch him first. (money heading to their families overseas .. spent .. laundered … gone)

    I'm just saying there are many factors that the OP needs to look into. It is a "trust" account, not usually held by a third party (like rental bonds are). They ask you for "trust", but a would-be bankrupt is generally considered someone 'untrustworthy' ..

    • HighAndDry on 19/06/2018 - 15:43
      +1

      No, it would be either a Real Estate Agent's trust account or a solicitor's trust account, both of which are strictly regulated. Sure - OP might have to go through with the purchase if the development doesn't actually stall, but otherwise the deposit is safe and they get it back.

      • Sofie519 on 19/06/2018 - 16:42

        You are confusing yourself with a general buy/sale. Off the plan purchases like I said depends on the terms of the contract. The deposit can very well go to the developer, or be accessible by him.

        There are so many levels of wrong to just assume the deposit is secure and the buyers has nothing to worry about.

        As mentioned check the terms of your contract. Then track and locate your deposit funds if it hasn't been used, if the terms of the contract allow for the deposit to be released, seriously consider taking it money back, as there is a genuine risk that the development won't be completed.

        • HighAndDry on 19/06/2018 - 16:53
          -1

          I haven't made any assumptions. I'm going to quote my other comments in this thread:

          Ask your conveyancer where your deposit is.

          And

          Only relevant if OP's deposit isn't in a trust account. It should be in a trust account.

          I was only addressing your comment re that even a trust account might not be safe, which is incorrect. If the money's in a trust account, OP's pretty much sweet as roses.

        • Sofie519 on 19/06/2018 - 17:10
          +2

          @HighAndDry:
          And my comment was, if it is held in a trust account where the developer is the trustee then that is another can of worms.

          In any case the OP has responded and looked into the areas everyone suggested. And I am relieved for him. We r just a community looking out for one another, I just meant to point out the fact that the deposit in off the plan sales are determined by the contract thus varies with each situation.

      • greentoad on 19/06/2018 - 16:53
        +1

        You are right mate. The trust account is held by the developer's solicitor in an interest accumulating account. It is to be released to developer only when developer gets the estate registered/ titled.

  • greentoad on 19/06/2018 - 17:00

    Thanks everyone, I am at ease right now. Having read all the comments here. I have talked to my conveyancer and even had a brief chat with developer's employee. There has been some confusion between various parties involved regarding some invoices sent to wrong address and company being mistakenly taken to court. It is being looked after.

    I think we are good for now and deposit is safe.

    • [Deactivated] on 19/06/2018 - 22:57
      +2

      Seriously, that sounds like BS to me. No one ever wants to admit they are about to go into liquidation and you shouldn't expect to get the truth from the company in question. You should seek legal advice from someone more expert than your conveyancer on this in order to protect your self. I'm guessing we are talking about 10's of thousands of dollars here so whats a $1000 to get some expert advice.

      • affable on 20/06/2018 - 12:02
        +1

        Any serious developer would not have a mixup with invoices in this day and age as there would have been months of overdue repayments and it would be to the same account numbers every month, its not like the bank changed their repayment details! Also suspicious that in January the timeframe pushed out, that would be the first default on the bank repayment I'm guessing.
        What invoices would the developer be getting as income anyway? All their invoices would be outgoings during development, apart from the deposits which sound like they all happened a year ago.

        Please let us know how this one pans out.

    • stirlo on 20/06/2018 - 12:49

      "I think we are good for now and deposit is safe."

      Thats an extremely dangerous assumption to make. Companies don't just enter liquidation by accident. You need verification in writing from you conveyancer as the the location of your deposit. If you conveyancer was recommended/arranged by the developer you should seek new independent legal advice asap.

      • greentoad on 20/06/2018 - 13:38

        We and other purchasers have been sent a letter from developers lawyer confirming that this liquidation has been activated in error by a third party and that the deposits are safe.

        They have filed an application in supreme court to stop the liquidation process.

        • [Deactivated] on 20/06/2018 - 23:23
          +3

          The developers lawyer is not your lawyer, they are paid to look after the best interests of the developer, they do not care about you, and have no obligation to you what so ever. You must not rely on their legal advice.

    • ExpressCoffee on 10/07/2018 - 15:06

      Hey mate, I'm in your boat in the same estate I think (99% sure). Is it possible to send me a PM so we can discuss this further? Maybe we can all band together and find a solution.

  • srhardy on 20/06/2018 - 07:20

    Question, what state is this in because

    1) in QLD a conveyancer works under a lawyer who will give you a real answer
    2) ALL MONEYS PAID WOULD BE IN A TRUST and a lawyer will confirm this, if its not then id be asking please explain!
    3) Ive never heard of paying a deposit on untitled land, a proposed subdivision that's without approval

    • affable on 20/06/2018 - 11:54

      greentoad said "We booked a plot of land in Melbourne south east ". I assume that means its in Victoria, unless there is another Melbourne?

  • ExpressCoffee on 06/07/2018 - 00:47

    I am in your exact position now man and I'm pretty worried about the whole situation. I feel like I can't trust anything that the developer tells us regarding what is happening and their replies are very very slow at best. Reading some of the comments here, I hope we can get the money back but who knows how long that can take.

    We poured our savings into this deposit and will set us back a great deal if worst case we lose this deposit.

    To all the people who are replying with rude or sarcastic comments, please keep in mind that this drastically affects people to the point where they can feel physically sick so please show a bit of compassion or don't say anything at all.

  • stirlo on 10/08/2018 - 22:51

    https://www.theage.com.au/politics/victoria/where-is-all-the…

    Just saw this article and thought of this post. Sorry OP if this is your case and all the best for getting your money back.

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